Mutual Insurance Company Of Iowa

I.

Title

Mutual Insurance Company of Iowa II.

Name of the Students with SR Code

III.

Introduction

The Mutual Insurance Company of Iowa (MICI) is a major insurance company with one of its major office facility located in Des Moines, Iowa. The Des Moines office has the responsibility in processing insurance claims for the entire nation. In recent years, MICI has experienced rapid growth in its sales, resulting to the increase of insurance claims received by the office, reaching as much as 2,500 forms on a daily basis. However, not all of these claims are processed and accomplished in the same day. The office can only process less than 2,500 forms per day, resulting to voluminous backlogs in claims processing. Even though the actual work would only take an average of three hours, it normally takes Des Moines office 10 weeks to release checks or notice, thereby causing distress to both its customers and employees.

To resolve the issue, the management of MICI has decided to search for and implement a more aggressive, yet economical system that will be able to handle the overwhelming amount of transactions needed to be processed. With that, they have decided to try the JIT approach for claim processing.

IV.

Statement of the Problem

The main problem arising from the article is stated below: Implement the JIT approach that shall efficiently utilize the Company’s resources and accomplish the document processing of MICI office in the least amount of time possible. The sub-problems are also listed as follows: 

Provide training to employees and managers under the JIT principles;



Lessen the amount of time consumed to process a claim; and



Provide a better and a more efficient work layout

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V.

Results and Discussion

Just-in-time (JIT) is defined as “an approach of continuous and forced problem solving via a focus on throughput and reduced inventory.” (Heizer and Render, 2011). It basically means to retain what is only needed. This results to a continuous improvement, thereby minimizing time and cost without sacrificing the quality of the product.

The JIT principle, after being coined and developed in the 1960s in Japan, was largely used and implemented in manufacturing companies who sought out the efficiency of the approach. Because of the continuous process improvement required by JIT, many companies, even those coming from different industries such as service providers, have also used the approach and applied it to their respective processes.

Some of the JIT concepts have also been proven to be useful and fitting to organizations with paperwork operations, like MICI. Their claiming process, when compared to a factory, may be considered as simply converting the claims received (the raw materials) into a released check or notice (finished goods). Throughout the conversion, numerous value adding activities have been done by the employees in order to provide the service to the customers.

According to Syed (2009), there are concepts that are usually adapted by such companies. These include the following: 1. Consistent high quality; 2. Flexible workforce; 3. Standard methods; and 4. Automation. Ensuring a high quality output is one of the main improvements that the JIT system can bring in a company. Through continuous research and study of the operations, MICI can drastically improve the quality of its output that may result to less throughput time. This can be achieved by ensuring that the employees are all knowledgeable about their job responsibilities, by providing trainings, seminars and knowledge sharing sessions. Another area that MICI can improve on in order to provide a high quality is the work layout. By ensuring that the documents can be easily transferred to the next step, or in this case,

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to the next processing department, the number of hours consumed due to motion and transportation of documents may be lessened as well. The current layout of the company may be seen below:

Figure 1. MICI – Current Work Layout

CUSTOMER CLAIM APPROVAL DEPARTMENT

CUSTOMER CLAIM ENTRY DEPARTMENT Worker 1

Worker 1

Worker 2

Worker 2

ACCOUNTING DEPARTMENT

Worker 1

Worker 2

Another concept of JIT that is useful for an operation similar to MICI is having a flexible workforce. This pertains to molding employees to have different set of skills in order to have resources with broad knowledge and thus enabling them to have higher responsibilities. This will result also to higher employee productivity, and therefore, higher efficiency. Once the employees can perform other jobs, reassignment and rerouting of tasks is possible, thus avoiding bottlenecks. Given this improvement, the work layout may

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also be improved upon. For instance, instead of passing through a single route, cross-functional routing may be applied to the work layout: Figure 2. Recommended layout Another recommendation brought out in the JIT is to have standard forms for the claims processing. This will provide advantageous to the Company because all the needed information from the customers can immediately be gathered. This will also prevent further delays caused by incomplete documents.

Process automation can also be applied to the claims processing of MICI. For instance, there are multiple computer systems available that caters to insurance companies. Such systems assist companies to record, monitor, and manage all existing insurance policies. This will reduce manual processes such as pulling out of records and computation of claims, among others.

These are some of the improvements that the JIT principle can bring to the Mutual Insurance Company of Iowa. Of course, implementing a major change in process may entail cost, but the Company should not forget the benefits it would bring to the Company and its stakeholders.

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VI.

Conclusion

Specific focus only a just-in-time model resulted in significant elimination of waste, reduction in variability and improved throughput. Focusing in JIT, claim processing managers and employees are to be trained for the JIT principle. According to the principle responsibilities for quality control activities are moved to each employee, means each employee will responsible for the quality. Data entry skills also taught to both managers and employees for the accuracy of the data that will reduce clerical errors. The new system will not only fix the current problem but will have other benefits to company as well. The new system will require respect for the people concept especially by the management to value and respect the juniors by incorporating their ideas in decision making process and solving company problems. Staff motivation and training will have to be undertaken for the JIT system to work effectively. However according to Shili, (2011), JIT system may involve a major overhaul of company business systems which may be difficult and costly. The system may also open the company to risks connected with the supply chain. In conclusion, incorporation of many procedural and operational changes was incorporated by Mutual Insurance Company of Iowa. By examining the current structure of the company, installing just-intime will help managers to cut down processing time by standardizing forms, reducing work-in-process and reducing data entry timing. The company is expected to make various changes as stated before. Many attributes are expected if just-in-time has been installed. Evidently, the system is good and applicable to MICI company and if well implemented will fix the company problem.

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References: Chang, H. (2009). An empirical study evaluating supply chain management integration using balanced scorecard in Taiwan. Service Industries journal, 29 (2), 185-202. Gupta, A. (2005, May 31). Relevance of JIT in Service Sector. Retrieved from Heizer, J., & Render, B. (2011). Operations Management. New Jersey: Pearson. International Journal of Business & Management, 6 (2), 160-168. Niranjan, T. T., and Weaver, M. (2011). A unifying view of goods and services supply chain management. Service Industries Journal, 31 (14), 2391-2410.0 Shili, S. (2011). The Strategic Role of Lean Production in SOE’s Development. Syed,

F.

(2009,

August

29).

Just

in

Time

System

in

Services.

Retrieved

from

https://totalqualitymanagement.wordpress.com/2009/08/29/just-in-time-system-in-services/ http://shodhganga.inflibnet.ac.in/bitstream/10603/113891/13/13_chapter%204.pdf

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